00:01
You want to save $30 ,000 for a down payment on a home by making regular monthly deposits over five years.
00:12
Take the apr to be 5%, so that's 5 % a year.
00:17
How much do you need to deposit each month? well, the formula we need to use is the balance is our deposits, parentheses 1 plus r to the t minus 1 over r.
00:29
So what we're going to, our balance is going to be that $30 ,000.
00:34
So now we need to figure out what r and t are going to be.
00:38
So we're looking at monthly deposits.
00:41
So this is an annual percentage rate, 0 .05 per year.
00:46
We want to change that to monthly.
00:49
So we're going to put that over 12 months because we're doing this over a month.
00:53
So 0 .05 over 12 is going to be my value of r.
00:58
Now, t is the number of times you make the deposits.
01:01
So you're going to make it 12 times a year for five years.
01:05
So we're looking at t equal to 60.
01:09
So now let's substitute.
01:11
B, our balance.
01:14
Let me erase what i just wrote...